Question

Roche Biotech provides company cars for its salespeople that cost an average of $25,000. Using the class recovery system of five years, what is the depreciation expense in year 2 of the MACRS?

Answer 1

$8,000

Step-by-step explanation:

Data provided in the question:

Average cost of car = $25,000

Now,

Using the class recovery system of five years,

The rate of depreciation expense in year 2 of the MACRS is 32%

Therefore,

The depreciation expense in the year 2 will be

= Average cost of car × Rate of depreciation

= $25,000 × 32%

or

The depreciation expense in the year 2 = $8,000